SEC Adopts Recordkeeping Rule Amendments
The Securities and Exchange Commission (SEC) recently adopted amendments to the electronic recordkeeping, prompt production of records and third-party recordkeeping service requirements applicable to broker-dealers, security-based swap dealers (SBSDs), and major security-based swap participants (MSBSPs).
The amendments are designed to modernize recordkeeping requirements given technological changes over the last two decades and to make the rule adaptable to new technologies in electronic recordkeeping. The amendments will also facilitate examinations of broker-dealers, SBSDs and MSBSPs.
The SEC’s broker-dealer electronic recordkeeping rule currently requires firms to preserve electronic records exclusively in a non-rewriteable, non-erasable format, known as the write once, read many format. The amendments add an audit-trail alternative under which electronic records can be preserved in a manner that permits the recreation of an original record if it is altered, overwritten or erased. The audit-trail alternative is designed to provide broker-dealers with greater flexibility in configuring their electronic recordkeeping systems so that they more closely align with current electronic recordkeeping practices and also protect the authenticity and reliability of original records. The amendments apply the same requirements to nonbank SBSDs and MSBSPs.
Among other things, to facilitate examinations and make them more efficient, the amendments require broker-dealers and all types of SBSDs and MSBSPs to produce electronic records to securities regulators in a reasonably usable electronic format.
The adopting release will be published on SEC.gov and in the Federal Register. The final amendments will become effective 60 days after publication in the Federal Register. The compliance dates for the new requirements will be six months after publication in the Federal Register in the case of broker-dealers and 12 months after publication in the Federal Register in the case of SBSDs and MSBSPs.